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Instability of banana trade

Nature:

Producers and exporters of bananas face three principal problems. First: the outlook for bananas on the basis of the expansion programmes already initiated is that export availability may outstrip the growth in world import demand. Estimates of surpluses vary from 10 to 70% of world import requirements. The resulting competition for markets may lead to drastic falls in prices. This is particularly serious for those developing countries for which the fruit is the mainstay of the economy. Second: a problem arises from preferential trading arrangements which give effective protection to certain highly dependent producing countries having traditional links with major consuming countries in Europe. Third: constraints on trade may have the incidental result of inhibiting the expansion of consumption. For example, some importing nations have up to 100% ad valorem duties.

Incidence:

Next to citrus fruits, bananas are the most important item in international fruit trade. More than 90% of world banana imports are absorbed by only 42 countries. In addition to this role in world trade, the banana is a staple food for people in tropical zones, accounting for 80% of world production.

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